Although Gen Y-ers’ reputation for lacking financial savvy is nothing new, this recent report will make some parents shake their heads and wonder where they went wrong.
According to researchers at Ohio State University, young adults feel empowered by their credit card and education debts. Yes, empowered.
The more credit card and college loan debt 18 to 27-year-olds had, the more they felt like they were in control of their lives. Ironically, this is the generation that is expected to deal with an increasingly growing 14 trillion dollar debt.
Researchers examined data on college loans and total credit-card debt and then studied how these debts related to consumers’ self-esteem and sense of mastery.
Those in the lowest economic class felt the most in control of their lives in proportion to a greater amount of debt they held. Researchers didn’t find any impact on middle class participants’ self-esteems by holding educational debt, but they did receive an ego boost from holding more credit card debt. Those who were raised in more affluent families showed no effects from holding debt.
Finally when participants passed the age of 28, they began to feel the stress of their debt.
The study’s lead author Rachel Dwyer said, "By age 28, they may be realizing that they overestimated how much money they were going to earn in their jobs. When they took out the loans, they may have thought they would pay off their debts easily, and it is turning out that it is not as easy as they had hoped," Science Daily reported.